Failure to respond to Tax ID request: permanent or temporary limitation?

[chaichaoyi]

Hi I'd like to think ahead.

I know after my sales exceed a certain level (like, 100 item and $10K in a given year), Paypal will preemptively email me and request me to enter tax ID in accordance with the 1099-K regulation.

If I do not provide a valid ID, my account will be limited -- many forum members have reported this happening.

My question is: will the limitation be permanent or temporary? For example, if by December 2014, my accumulated sale turns out to be only 150 items and $15K, and shows that the tax ID request is actually unnecessary. Will my account be restored in the beginning of year 2015? Or will the limitation still stay simply because (in spite of all the "turned-out unnecessary request" argument) Paypal is not happy with my failure to submit tax ID?

Please share your experience!

[vogeltron]

The last two years. I had one of my stealth accounts get hit with the Limitation for not providing Tax ID. The PayPal was limited from receiving funds and closing the account.

Both years mid to late January. The account has been restored. There is no guarantee this will continue into the future. I will be trying to manage all my accounts so I stay under 200 Transactions and Under 20K so I don't get dinged with the can't receive funds limitation again.

[GreenBean]

Originally Posted by chaichaoyi

Hi I'd like to think ahead.

I know after my sales exceed a certain level (like, 100 item and $10K in a given year), Paypal will preemptively email me and request me to enter tax ID in accordance with the 1099-K regulation.

If I do not provide a valid ID, my account will be limited -- many forum members have reported this happening.

My question is: will the limitation be permanent or temporary? For example, if by December 2014, my accumulated sale turns out to be only 150 items and $15K, and shows that the tax ID request is actually unnecessary. Will my account be restored in the beginning of year 2015? Or will the limitation still stay simply because (in spite of all the "turned-out unnecessary request" argument) Paypal is not happy with my failure to submit tax ID?

Please share your experience!

Do you know that paypal can and does ask for tax ID on sales as low as $5000?

Should paypal perceive total combined sales may reach the $20,000, they will ask at any point they want.
Keep that in mind for your business operations this year.

Back to your question, some accounts were restored after being limited for no tax info. Not enough data in so far to say if this will continue.

If you are making money, you should be paying taxes.

[chaichaoyi]

Originally Posted by vogeltron

The last two years. I had one of my stealth accounts get hit with the Limitation for not providing Tax ID. The PayPal was limited from receiving funds and closing the account.

Both years mid to late January. The account has been restored. There is no guarantee this will continue into the future. I will be trying to manage all my accounts so I stay under 200 Transactions and Under 20K so I don't get dinged with the can't receive funds limitation again.

At which point did your account get limited? A fixed period (X days) after the initial request? Or soon after you exceeded the actual 200/$20,000 threshold?

Thank you!

[chaichaoyi]

Originally Posted by Greenie

Do you know that paypal can and does ask for tax ID on sales as low as $5000?

Thank you for sharing your perspective.

It looks like Paypal is using something similar to linear extrapolation when estimating the cumulative sales at the end of each year...

[jeffweico]

Originally Posted by chaichaoyi

Thank you for sharing your perspective.

It looks like Paypal is using something similar to linear extrapolation when estimating the cumulative sales at the end of each year...

Yes, they are using an algorithm of some sort, I have received requests with as little as $6,000 received.

[GreenBean]

Originally Posted by chaichaoyi

Thank you for sharing your perspective.

It looks like Paypal is using something similar to linear extrapolation when estimating the cumulative sales at the end of each year...

Good observation.

I am hoping the honeymoon period is not over yet with supplying Tax ID. However since paypal is part of the equation that may not be the case.

[bjammin]

That was definitely nice to know. I figured once I got hit with that threshold, and PP asked for information the I was just doomed

I don't see why this wouldn't continue into the future, as long as you don't actually hit the threshold then you've done nothing wrong. Just report the taxes yourself.

[ace1977]

I have had most of my paypal accounts reset already. I have 2 that are still blocked. I decided to find out what was happening by emailing paypal re: one account. After receiving an automated answer I replied that if my account was not going to be usable in the future, please contact me as I am paying fees on the associated bank account. The reply was a request for SS# and a copy of my driver's license. I have no intention of forwarding an "instant identity theft" kit such as that to paypal.

The ebay account is in good standing. I am going to experiment with getting that going again. if it all blows up I dont really care. it was at least be a learning experience.

i agree with a previous post that keeping all under 200/20k is the way to go per paypal account.